labor lawAdivision of labor law center

On July 1, 2008, the Michigan minimum wage will be increased by 25 cents, from $7.15 per hour to $7.40 per hour.

 

All overtime and minimum wage laws are enforced by Michigan Wage and Hour Division of the Department of Labor and Economic Growth. The state minimum wage in has risen nearly two dollars since 2005, despite relatively high unemployment.

 

The Michigan Minimum Wage Law of 1964 has two significant exceptions regarding younger workers. All state employers need to be aware of these different parameters.

 

First, according to the Michigan Department of Labor And Economic Growth (DLEG) workers aged 16 and 17 can legally be paid less than minimum wage. MCL 408.384b (2) of the Michigan Compiled Laws permits companies to pay these workers 85% of the Michigan minimum wage.

 

The rate for 16 and 17 year olds right now is $6.08 per hour. On July 1, it will increase to $6.29, because the Michigan state minimum wage will increase. On July 24, though, 16 and 17 year olds will be entitled to the new federal minimum wage of $6.55 per hour. Under Public Act 154 of 1964, if the 85% rate is less than the federal minimum wage, then the employee is entitled to the federal minimum wage.

 

Second, Michigan minimum wage laws (MCL 408.348b (1) of the Michigan Compiled Laws) also allow companies to pay young workers (under age 20) a training wage during the first 90 days of employment. New employees aged 16 to 19 can receive a wage of $4.25 per hour regular time and $6.375 per hour for overtime (any time over 40 hours in one week). Workers who earn tips may be paid $2.65 per hour, if they earn an average of $1.60 per hour in tips.

 

The Michigan Youth Training Wage law sets these standards, and certain qualifying conditions must be met before employers may pay workers under this law.

 

Employers covered by the Fair Labor Standards Act of 1938 (FLSA) do not qualify for the youth training wage. FLSA covers governments, hospitals, health care and schools (including colleges). Also under the jurisdiction of FLSA are employers who engage in interstate commerce or earn annual revenue of $500,000 or more.

 

State law prohibits companies from terminating or changing the hours, benefits or duties of another employee, just to hire a youth worker at the lower minimum wage. Companies who do will face fines of $1,000 per occurrence.

 

Visit www.michigan.gov/wagehour for more information.

 

These wage increases have caused quite a controversy. Governor Granholm supported the increases, but critics worry about the timing. Since 2004, Michigan’s economy has suffered some setbacks and the unemployment rate is rather high when compared to neighboring states such as Indiana.

 

The U. S. Department of Labor states that when employees are eligible for both federal and state minimum wage, they are entitled to the wage which provides greater benefits. Michigan’s minimum wage is higher than the federal rate, so workers covered by both are entitled to the state minimum.

 

The Michigan minimum wage for tipped workers hasn’t changed since 2006. The current rate if $2.65 per hour. Only workers who can claim $4.75 per hour in tips can be paid this minimum rate, because Michigan law caps tip credit for employers at $4.75 per hour. For employees who don’t receive tips that high, the company must pay them a higher rate, so that wages and tips combined equal the state minimum wage.

 

Several companies moved their manufacturing plants to nearby Indiana where the minimum wage is 85 cents lower. Plus, a major car maker offered early retirement options to almost every hourly worker. The company will then hire new workers at $17 per hour, around half the rate for current employees.

 

Opponents are concerned that increasing the Michigan minimum wage may make the unemployment situation even worse. Virtually every employee is entitled to the state minimum wage. Tipped workers who put in over 40 hours in one week are eligible for overtime at $6.35 per hour.

 

Michigan employers must update their labor law posters as soon as the changes take effect, or face fines and penalties.

 

 

 

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